Internal Controls

Accounting Controls

100

True or False? Internal Controls are ONLY implemented in a business to prevent fraud?

False, internal controls are ALSO implemented to: prevent errors being made in the first instance, detecting errors and increasing efficiency.

200

Would the use of prenumbered source documents be an example of a sound accounting practice?

Yes, and other examples would be using a chart of accounts and use of comparative analysis. to aid internal control in a business

300

What TERM would you call an independent review of a business's accounting practices and procedures in order to decide whether the financial records represent a true and fair statement of the activities.

This is called an AUDIT

400

Are auditors internal or external to the business?

They can be both.

500

What are the 2 practices of internal accounting controls?

Sound accounting practices and auditing.

Admin Controls 1

100

What TERM is used to describe when duties of personnel are separated so that the work of one employee acts as a check on the work performed by another?

Division of duties.

200

Would the practice of division of duties help minimise fraud?

Yes as any inaccuracies can be located by another person

300

In a large business, what is a simple way to ensure that unprohibited persons do not have access to the company's computer systems?

Password protect acceptance into the system or into specific areas of the system.

400

Why is the practice of rotation of duties beneficial for internal control? Extra points if you can think of another reason.

1) Employees benefit from multiskilling and the company benefits by having staff who are flexible workers. 2) Employees are discouraged from committing fraud if they know that someone will soon be performing their job.

500

What are the 5 practices of internal administration controls

Division of duties, rotation of duties, physical controls, personnel policies and integrity controls.

Admin Controls 2

100

What are you safeguarding when you practice "Physical Controls" ?

Financial records and assets

200

Why would backup of computerised accounting information be better stored offsite?

In case of fire or other physical damage.

300

What term encapsulates an effective system of training qualified employees with clear and consise job descriptions to perform their jobs responsibly and carefully whilst implementing aspects of the accounting system.

Personnel policies

400

Integrity Controls ensure confidentiality of of records. True or False?

True

500

The practices of division of duties, rotation of duties, physical controls, personnel policies and integrity controls all come under the banner of.....What?

Internal administrative controls

Cash Controls 1

100

Internal cash controls are essential to prevent misappropriation or fraud. True or False?

True

200

All cash received should generate a source document. True or False?

True

300

All cash received daily should be banked on Fridays so that the cash is in the bank before the weekend. True or False

False, all cash should be banked intact daily.

400

It is not important to keep your cheque butts, its just creating a bigger carbon footprint. True or False?

False, cheque butts are documentary evidence for auditing purposes and must be kept.

500

Is it true that petty cash doesnt need to be locked up during the day? (Its only a small amount of money)

False, all cash sould be safeguarded no matter what the amount. Business may use a safe, vault, register float or a lockable petty cash container.

Cash Controls 2

100

Why is it important to keep cancelled cheques and receipts?

They are needed for auditing purposes.

200

It is wise to have the same person who receives money be the person who entered the details and also banks the money. True or False?

False, division of duties should be implemented to separate those who handle cash from those who record cash AND those who bank the cash. The CASHIER cannot be the ACCOUNTANT and the ACCOUNTANT cannot be the BANKER.

300

A business will perform a bank reconciliation to ensure that a business cash at bank account matches with the bank's statements. True or False?

True

400

When a business anticipates expected cash receipts and cash payments, they are determining their WHAT budget?

Cash Budget

500

What is the best way to pay for small items such as staffroom milk, coffee, stamps, etc. You would use this when the items are so small that a writing a cheque would be considered unneccessary.

Petty Cash. The petty cash is usually kept in a lockable container and consists of small amounts of money that is distributed for small items and must be replaced with receipts. The funds are reimbursed up to several stages within a month and always accounted for at end-of-period reports.